Humana plans get better ratings, more money from federal government

Humana Inc. has all but made up for a ding on the quality measures of many of its members' health plans.

The Louisville-based health insurer and services provider has increased its membership in plans rated four stars or higher by the Centers for Medicare and Medicaid Services (CMS) to 74 percent for the 2018 plan year, according to a news release.

The CMS releases quality ratings on a five-star rating system for Medicare Advantage and Medicare Part D prescription drug plans every year in October, just before the open enrollment period, to help seniors and others find plans to fit their needs.

In October 2016, Humana (NYSE: HUM) saw the number of its members on four-star or higher plans fall to 37 percent from 78 percent in 2015.

Humana's stock price dropped after the diminished ratings. At the time, Humana claimed the star ratings didn't necessarily reflect the performance of its plans.

CMS pays insurers for each Medicare Advantage member it covers. Plan providers are required to meet or exceed the requirements for traditional Medicare coverage. CMS often increases these payments for seniors who have chronic conditions.

Humana CEO Bruce Broussard said in the company's first-quarter earnings call that Humana would intensify its focus on covering seniors with chronic conditions

The star ratings are used by the CMS to determine bonus payments or rebates. Plans with higher ratings receive higher bonuses.

CMS uses more than 40 quality measures to tabulate star ratings.

Humana has about 8.5 million Medicare members in the U.S.: 5.2 million are Medicare Advantage members and 3.3 million are Part D drug plan members, according to the release.

About 2.4 million Humana members are on plans with 4 stars or more. Plans offered in Florida, Illinois, Kentucky, Mississippi, North Carolina, Oregon and Tennessee received a 4.5-star rating or higher from CMS.

CMS said recently that tor the rest of the country, about 73 percent of all Medicare Advantage enrollees would be on plans with a 4 star or higher rating.

Humana didn't say in the release what the impact of the increased quality ratings would be for its earnings.